Product counterfeiting has become a significant factor in business. According to current reports, already ten percent of world trade is done through copies or counterfeits through product knock-offs, illegal surplus production, parallel or re-imports which cause damages internationally in a range of 300 billion Euros. In Germany, according to the German machine and equipment producers association, about two thirds of the manufactures of capital equipment are affected by product counterfeiting.
Product counterfeiting significantly affects the labor market, wherein 50,000 jobs are lost in Germany alone according to estimates by the ministry of justice due to product counterfeiting. In all of Europe as many as 300,000 jobs are affected.
Thus, capital equipment manufacturers are affected by product counterfeiting in particular, since they had to make substantial investments to develop, test, produce and advertize their quality products. A counterfeiter does not have to make these investments so that tagging on to the success of the original, he saves substantial cost and therefore has much higher profit margins, in particular when the counterfeit products are of inferior quality or the counterfeiter can sell at substantially lower prices.
Another downside is that manufacturers lose their reputation in the marketplace when counterfeits with inferior quality and safety enter the marketplace but are not immediately identifiable as counterfeits but are associated with the original manufacturers.
Another big problem besides the economic damages through products counterfeiting are the accidents and health risks that may be associated with counterfeit products. This is the case in particular when counterfeit products are not produced according to the same standards as the originals. This applies in particular to the drug industry, but also in other safety critical business areas like machinery and equipment, inferior counterfeit products can have significant consequences.
Thus it is an objective of capital equipment manufacturers to prevent product counterfeiting as far as possible. For this purpose, various protective technologies or technical safety devices like, for example, holograms, safety labels, micro color codes, digital watermarks and similar are developed, wherein the present emphasis is on developing product identifiers, whose features cannot be counterfeit.
For example, modern paper money uses a plurality of safety features intended to make counterfeiting impossible. Among these are, for example, Euro banknotes using special paper, optical safety features like watermarks, anti-copy grids, Melier fibers, safety threads, special dyes, iris printing, foil elements, holograms, micro-perforations, micro-lettering, fluorescent colors, optically variable ink, gloss effects, see-through windows, see-through registers, haptic safety features like paper feel and embossing and acoustic safety features regarding the sound of banknotes during crumpling or rubbing. Additionally, features are being used that are machine detectable like infrared dyes, magnetic elements, electric conductivity and similar.
A disadvantage of these product identifiers, however, is that their counterfeit safety is only provided as long as the product identifier has a technological edge over the counterfeiters which, however, typically is only temporary. Additionally, such multilayered product identifiers are rather expensive and can therefore only be effectively used for high-price products. Eventually, also a counterfeiting of particularly safe product identifiers cannot be completely prevented since it is very difficult for very complex product identifiers for a consumer and also for a seller to identify whether it is an original product identifier or a counterfeit.